Constellation Brands, the beverage giant behind Modelo and Corona, missed Wall Street expectations for both earnings and revenue in its latest quarter as newly imposed aluminum tariffs hit its bottom line. The company reaffirmed its fiscal 2026 outlook despite ongoing challenges.
The report, covering the quarter ending May 31, 2025, marked the first full earnings cycle affected by U.S. President Donald Trump’s tariff increases on imported aluminum, a material essential to the production and packaging of canned beer.
Key Earnings Miss
Constellation reported adjusted earnings per share of $3.22, falling short of analysts’ estimates of $3.31, according to LSEG. Revenue came in at $2.52 billion, narrowly missing the forecast of $2.55 billion.
Net income declined significantly to $516.1 million, or $2.90 per share, down from $877 million ($4.78 per share) during the same period a year earlier. The company’s operating margin shrank by 150 basis points, largely due to the rising cost of aluminum, now taxed at 50%.
Aluminum Tariffs Drive Cost Pressures
Aluminum, along with imported Mexican beer, forms the backbone of Constellation’s core business. The company’s portfolio includes high-performing brands like Modelo Especial, Pacifico, and Corona, with beer sales making up nearly 80% of its total revenue.
The Trump administration’s escalation of aluminum duties from 25% in March to 50% in June has added immediate financial strain, just as consumer demand continues to soften.
“Higher aluminum costs clearly impacted our margins this quarter,” CEO Bill Newlands said in a statement. He cited “non-structural socioeconomic factors” as contributing to slower demand, with shipment volumes falling 3.3% across the beer segment.
Consumer Demand, Political Concerns Add Headwinds
Newlands also acknowledged the impact of shifting consumer sentiment, particularly among Hispanic customers, a demographic that accounts for nearly half of Constellation’s beer sales.
Earlier this year, the CEO noted that fears over Trump’s immigration policies had begun to affect buying behavior in key markets.
In addition to the aluminum cost burden, the company is also feeling the effects of its recent divestiture of Svedka Vodka, which contributed to a 5.8% drop in net sales year-over-year.
Fiscal 2026 Outlook Maintained
Despite the quarterly setbacks, Constellation reiterated its fiscal 2026 guidance, projecting comparable earnings per share in the range of $12.60 to $12.90. Organic net sales are expected to fall between a 2% decline and a 1% increase, suggesting modest optimism.
Shares of Constellation Brands (NYSE: STZ) dipped less than 1% in after-hours trading. The stock has declined over 20% so far in 2025, with investors increasingly wary of inflationary pressures and policy-driven volatility.
Constellation executives are scheduled to elaborate further on the quarter during their earnings call on Wednesday at 10:30 a.m. ET.
